Minnesota has long authorized police departments and similar agencies to seize property associated with certain crimes and, under proceedings known as “civil forfeiture,” assume ownership of the property. In the past, criminal property seizures have caused problems for secured creditors who have a properly perfected security interest in vehicles or other equipment that is seized by police departments because the applicable law did not define a secured creditor’s rights to the forfeited property or provide a procedure to recover the property. Luckily, the legislature listened to the concerns of secured creditors and recently amended the law to include an “innocent owner” right of recovery for vehicles to be forfeited as part of a controlled substance seizure, lawful arrest or search, or other designated offense.
Minn. Stat. §§ 169A.63 & 609.5314, Subd. 1a.1 The new “innocent owner” law went into effect January 1, 2022, and applies to seizures under Minnesota Statute Sections 169A.63 (vehicle forfeiture related to impaired driving and other offenses) and 609.5314 (forfeiture of property in connection with a controlled substance seizure) that take place on or after that date.
Under the law, an “innocent owner” includes, “[a]ny person, other than the defendant driver, alleged to have used a vehicle in the transportation or exchange of a controlled substance intended for distribution or sale, claiming an ownership interest in a vehicle that has been seized or restrained” by law enforcement. § 609.5314, Subd. 1a(a).
When law enforcement seizes a vehicle, they are required to provide “all persons known to have an ownership, possessory, or security interest in seized property” notice of the seizure and the intent to forfeit the property. §§ 169A.63, Subd. 8(b) & 509.5314, Subd. 2.2 The “innocent owner” may then assert its right to recover the vehicle by serving written notice of its claim to the prosecuting authority. This notice must be provided to the prosecuting authority within 60 days of the service of the notice of seizure. Although there is no specific case law on the subject, as the law is so new, a secured creditor could assert its right of recovery in a letter requesting recovery of vehicle as an “innocent owner”. Although the law does not specifically state what needs to be included with the notice, a secured creditor should include a copy of the promissory note, security agreement, and lien card to assist the prosecuting authority in determining what property is at issue and whether the secured creditor is an “innocent owner” under the law and entitled to recovery of the vehicle.
Upon receipt of the notice from the secured creditor, the prosecuting authority may either release the vehicle to the secured creditor or proceed with the forfeiture. §§ 169A.63, Subd. 7a(b) & 609.5314, Subd. 1(b). If the prosecuting authority decides to proceed with the forfeiture, it must file a separate complaint, in the name of the jurisdiction pursuing the forfeiture against the vehicle within 30 days of receipt of the secured creditor’s notice. The complaint must be served on the “innocent owner”. The forfeiture hearing should be held within 30 days of the filing of the complaint, to the extent practicable. §§ 169A.63, Subd 7a(d) & 609.5314, Subd. 1(d).
At a forfeiture hearing, the “innocent owner” must prove that it has an actual ownership interest in the vehicle and “did not have actual or constructive knowledge that the vehicle would be used or operated in any manner contrary to law or that the asserting person took reasonable steps to prevent use of the vehicle by the alleged offender.” §§ 169A.63, Subd. 7a(f) & 609.5314, Subd.1(f). Luckily a secured creditor generally does not have actual or constructive knowledge that the vehicle would be used for unlawful purposes. Thus the secured creditor should be in a better position than the debtor to obtain possession of the vehicle because it is easier for the secured creditor to establish itself as an “innocent owner”. As such, the secured creditor should not rely upon the debtor’s promises to recover the vehicle but protect its rights to the vehicle itself per the statute.
Unfortunately, however, if the court determines that the secured creditor is an “innocent owner” and orders the vehicle returned to the “innocent owner”, the vehicle does not have to be released until the “innocent owner” pays the reasonable costs of towing, seizure, and storage incurred before the “innocent owner” provided the notice asserting its right to the vehicle and storage of the vehicle incurred more than two weeks after the court’s order returning the vehicle to the “innocent owner.”
If within 60 days after the notice of the seizure and forfeiture was sent, the law enforcement agency does not release the vehicle or bring a claim in court as laid out above, then the secured creditor as an “innocent owner” will need to file a demand with the court in the form of a complaint for judicial determination of the forfeiture.
Thankfully, after years of uncertainty, secured creditors have been given direction and support on how to recover collateral that has been seized by law enforcement.
1 The “innocent owner” right of recovery is currently limited to forfeitures related to a controlled substance seizure under Minnesota Statute Section 609.5314. It has not been extended to forfeitures related to other criminal activity, such as crimes associated with prostitution and fleeing a police officer under Section 609.5312.
2 The notification to a person known to have a security interest in seized property applies only to motor vehicles required to be registered under chapter 168 and only if the security interest is listed on the vehicle’s title.